Boot Strapping

Thursday, 3 March 2011

My time at MIT taught me all about “boot strapping” – the strategy of starting a business with very little and growing it WITHOUT borrowing – funding from within. LOTS of very LARGE businesses started like this.

We never borrowed any money in MiniMovers during the first 10 years. We worked enormous hours and poured every spare dollar back into the business (carefully on expenses to avoid the provisional tax trap), taking very little out for ourselves (usually way less than we paid our employees).

My view was “I’m building a money machine to provide the lifestyle I dream of”.

I also had the view that it will be a lot more difficult to become bankrupt, if we owed very little and were careful with any fixed commitments (like leases).

As old fashioned as it may be – we went “without” until we could afford it.

It worked beautifully for us.
I don’t think this strategy is wrong – it just happens it’s the OPPOSITE of what they teach at “Business School” where “leverage” and “return on investment” are the mantra.

Still don’t think I’m wrong.

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  1. ” We never borrowed any money in MiniMovers during the first 10 years” that is a message more of us also need in their personal lives.

    Exactly the message Dr Thomas Stanley (Of the Millionaire next door ) gives on his blog. FRUGAL FRUGAL FRUGAL.

    Thanks for reinforcing the message Mike !

  2. Controversial as always! Love that you Think the Opposite to find the best solution. Its probably good to note that by having such a great business plan and believing in your product you can now pay yourself what you are worth though. I think what happens with most business owners is they get in the habit of not paying themselves and continue to do this for the life of their business. Boot strapping can only go so far!

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